A federal judge Monday lifted a restraining order that for three weeks had blocked New Orleans officials from implementing several new regulations for the city's 1,600 taxicabs, such as setting maximum ages for vehicles used as cabs and requiring installation of credit card machines, GPS devices and security cameras. The city is now free to enforce those rules.

David Grunfeld, The Times-PicayuneTaxi owners challenged the legality of many of the regulations the New Orleans City Council passed in April at the urging of Mayor Mitch Landrieu and leaders of the city's tourism industry.

However, U.S. District Judge Eldon Fallon ruled against the city on two measures that many cab owners considered crucial. In effect, he gave each side a reason to declare victory on the issues that mattered most to them.

In a 35-page ruling, Fallon issued an injunction blocking the city from enforcing ordinances declaring cab owners' permits, known as certificates of public necessity and convenience, or CPNCs, to be privileges and not rights, and making their transfer discretionary.

Read the judge's ruling

Those ordinances would have meant the city could revoke the permits at will and block their transfer or sale to other owners, and that drivers would have been unable to use the permits as security in seeking loans. Many drivers have paid $50,000 or more for a CPNC, which some refer to as their equivalent of a 401(k) retirement account because they expect to be able to sell it for a similar or greater amount when they retire.

All of the new taxicab rules, passed by the City Council in April at the urging of the Landrieu administration and leaders of the city's tourism industry, had been scheduled to go into effect Aug. 1. However, they were blocked by a restraining order issued first by a Civil District Court judge and then continued by Fallon after the lawsuits challenging the legality of the measures were transferred to federal court at the city's request.

Proponents of the new rules said many local cabs are in poor condition and present a poor image of the city to visitors. Critics said some of the reforms would go too far and impose undue financial burdens on owners, causing many to go out of business.

More than half the cabs in the city are too old to meet the new age guidelines, which say that cabs can be no more than 11 years old. Starting in 2014, the maximum age will be reduced to seven years. In addition, starting in 2013, any new or replacement cabs can be no more than 5 years old.

The regulations requiring new equipment and placing new restrictions on cabs' age will force many owners to spend tens of thousands of dollars per vehicle, without offering any way for them to find the money or giving them enough time to comply, the critics charged.

The lawsuits challenged the new rules on a number of grounds, including that they would deprive owners of their property rights without due process or just compensation and that they would violate the constitutional guarantee of equal protection of the law.

Fallon rejected those arguments in regards to the ordinances setting age limits for cabs and requiring new equipment.

He said the city had shown a "rational basis" for those ordinances because they would ensure better service for customers, increase safety for both drivers and riders, and help New Orleans compete against other cities for conventions and major sports events. "It is within the city's power to enact these upgrade ordinances," he said.

Although some of the cab owners said the mandated upgrades could cost as much as $40,000 per vehicle, Fallon noted that Malachi Hull, director of the city Taxicab Bureau, said the cost should be only $2,000, provided that the vehicle does not have to be replaced to meet the new age rules. Fallon termed $2,000 "a tolerable price when compared with the public good that comes from the regulations."

City officials have discussed increasing taxi fares in order to help owners pay for the new equipment, although that idea was placed on hold after the lawsuits challenging the new rules were filed.

Moreover, Fallon said, by ruling that CPNCs are property, he was giving owners a solid basis on which to borrow money to pay for the upgrades.

Although theoretically the permits have always been owned by the city and simply leased to cab owners, Fallon noted that "since the 1950s, owners of CPNCs have traded, alienated, conveyed, encumbered, mortgaged and liened their interest" in them, giving the owners "a protectable property right" that the city could not erase by simply declaring the permits to be privileges.

Although the city claimed that redefining the status of CPNCs, like requiring newer cabs with extra equipment, was justified by its right to promote the public health, safety and welfare, Fallon rejected that argument.

"There is no evidence indicating that declaring CPNCs to be privileges promotes the health, safety and welfare of the community," he wrote, and the city had not explained how "placing the issuance and transfer of CPNCs at the sole and complete discretion" of a city bureaucrat would promote the public interest.

Cab owners and companies argued that by defining the permits as privileges and restricting owners' ability to sell or transfer them, "the city has reduced the property value of the CPNC to zero," leaving owners no way to finance the purchase of new vehicles or buy the newly required equipment. Fallon said they had made a good case for that position.

If those two ordinances were to take effect, he wrote, "an entire industry (would be) gutted of a large amount of its capital and deprived of a means of funding needed upgrades."